Spring-2016
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Master of
Business Administration - MBA Semester 3
MF0012-Taxation
Management
(Book ID:
1760)
Assignment
(60 Marks)
Note: Answers
for 10 marks questions should be approximately of 400 words. Each question is
followed by evaluation scheme. Each Question carries 10 marks 6 X 10=60.
Q1. Mr. X (38 year) is employed by A
Ltd. as marketing manager in Pune. The following information is furnished by
Mr. X for the previous year ending 31st March 2015.
Basic salary Rs. 12,00,000 p.a., DA
Rs. 40,000 p.a. (36 % of DA is considered for gratuity and Pension, but not for
Provident fund). Club allowance Rs. 5,000 p.m., Furnishing allowance Rs. 2,000
p.m. and HRA Rs. 40,000 p.m. Conveyance allowance is Rs. 2,000 p.m. which can
be used both for office and private purposes.
Up to August 31, 2014, he resides
with his parents and does not pay any rent. From September 1, 2015 he has been
allotted a company accommodation at Pune (population 23 lakhs) in lieu of house
rent allowance.
Club allowance has been discontinued
from January 1, 2015. And Mr. X has been provided by the company club facility
for private (20 %) and office use (80%). Expenditure by the company uptil 31st
March 2015 was Rs. 20,500.
On 20 Nov. 2014, Mr X has taken an
interest free loan from the company (SBI lending rate for Similar loan being
18.5 % p.a.). Mr. X and his employer contribute @ 10 % of his salary to P.F.
Interest Credited by the company in Provident Fund on June 1, 2014 @ 9.7 % is
Rs. 2,11,200.
Assuming that income of Mr. X from
Other Sources Rs. (-30,000), find out the net income and liability of Mr. X for
the Assessment Year 2015-16.
Based on above Compute the taxable
income and tax liability (before deducting TDS) of Ms. X for the A.Y. 2015-16
Rs. 2,600 (being Income-tax refund and Rs. 200 being Interest thereon)
Answer. Calculation of tax liability
of Mr. X
Basic salary 1200000
Q2. a) How is advance money received against
cost of acquisition adjusted?
b) State giving reasons, whether the
following assets are Short term or Long term:
i) X purchases a house on 10th March
2012 and transfers on 6th June 2014.
ii) Y purchases unquoted shares in an
Indian company on 10th March 2012 and transfers on 6th June 2012.
iii) Z acquires units of mutual fund
on 7th July 2013 and transfers those on 10th July 2014.
iv) A purchases diamonds on 12
September 2011 and gifts the same to his friend B on 31st December 2014 and B
transfers the asset on 20 October 2014.
Answer. a) Adjustment of advance money received
against cost of acquisition (Section 51)
It is
possible for an assessee to receive some advance in regard to the transfer of
capital asset. Due to breakdown of negotiations the assessee may have retained
the advance. In calculating capital gains the above advance retained by the
assessee must be used to reduce the cost of acquisition.
Q3. Ms. A purchases a house property
on 1st January 1976 for Rs. 95,000. She enters into an Agreement for sale of
the same property to Mr. X on 1st November 1983 and receives Rs. 10,000 as
advance. Following the demise of Mr. X immediately thereafter, the money was
forfeited by Ms. A. Later Ms. A gifts her property to her friend Ms. B on 15th
May 1985. The following expenses are incurred by Ms. A and Ms. B for
improvement of the property:
Particulars Cost
(Rs.)
Additions of two rooms by Ms. A
during 1978-79 25,000
Addition of first floor by Ms. A
during 1983-84 40,000
Addition of second floor by Ms. B
during 1990-91 1,15,000
Ms. B enters into an agreement for
sell the property for RS. 8,50,000 to Mr. P on 1st April 1993after receiving an
advance of Rs. 50,000. Mr. P could not pay the balance amount within the
stipulated time of two months and Ms. B forfeits the amount of advance.
Ms. B finally transfers the property
to Ms. C for Rs. 14,75,000 on 1st December 2014. Given the Fair Market Value of
the property on 1st April 1981 being Rs. 1,15,000; Cost Inflation Index for
1981-82 : Rs. 100; for 1983-84 : Rs.116; for 1985-86 : Rs. 133; for 1990-91 :
Rs. 182; for 1993-94 : Rs. 244 and 2014-15: Rs.1,024 compute the Capital gains in
the hands of Ms. B for the Assessment
Year 2015-16.
Answer. Calculation of the capital
gain of Ms. B for the A.Y 2015-16
Sale
Proceeds 14,75,000
Less:
Indexed cost of acquisition 70,356
Q4. i) Ms. Brinda, a U.S. citizen
visits India on 1st January 2014 to study and conduct research on Indian folk
culture. She has been regularly visiting India for 100 days in the past five
consecutive years to carry the research. Advise the residential status of Ms.
Brinda under extant rules referring to section 6 of the Income-tax Act 1961.
ii) What are the provisions of
Advance tax under section 2(1)?
Answer. i) Residential status: On the parameter of residence in
India, there are three categories: resident, non-resident, and not ordinarily
resident. The definition depends upon physical presence of the person in case
of individuals, and upon control and management in case of companies and HUFs.
Q5. Explain the need of Service tax
in India. What are the different approaches to Service tax in India?
Answer. Service tax is a tax levied by Central Government
of India on services provided or to be provided excluding services covered
under negative list and considering the Place of Provision of Services Rules,
2012 and collected as per Point of Taxation Rules, 2011 from the person liable
to pay service tax. Person liable to pay service tax is governed by Service Tax
Rules, 1994 he may be service provider or service receiver or any other person
made so liable. It is an indirect tax wherein the service provider collects the
tax on services from service receiver and pays the same
Q6. Mr. X (aged 59 years) furnishes
the following Profit and Loss account for the year ended 31st March, 2015.
Compute the Gross Total Income of Mr. X under respective heads, his Net Taxable
Income and Tax liability in the assessment year 2015-16.
|
Particulars
|
Rs.
|
Particulars
|
Rs.
|
|
General Expenses
|
13,400
|
Gross profit
|
3,15,500
|
|
Bad debts
|
22,000
|
Commission
|
8,600
|
|
Advance tax
|
2,000
|
Brokerage
|
37,000
|
|
Insurance
|
600
|
Miscellaneous Income
|
2,500
|
|
Salary to Staff
|
26,000
|
Bad Debt Recovery
|
11,000
|
|
Salary to Mr. X
|
51,000
|
Interest on Debenture
(Net interest Rs.22,500 + TDS Rs. 2,500)
|
25,000
|
|
Interest on Cash Credit
|
4,000
|
Interest on Fixed Deposits
(Net interest Rs. 11,700 + TDS Rs. 1,300)
|
13,000
|
|
Interest on loan to Mrs. X
|
42,000
|
|
|
|
Interest on Capital of Mr. X
|
23,000
|
|
|
|
Depreciation
|
48,000
|
|
|
|
Advertisement
|
7,000
|
|
|
|
Contribution to Employees’ Provident Fund
|
13,000
|
|
|
|
Net Profit
|
1,60,600
|
|
|
|
Total
|
4,12,600
|
Total
|
4,12,600
|
Supplementary information:
Permissible depreciation as per CBDT
circular is Rs. 37,300 which includes depreciation of permanent glow sign
board.
i. Advertisement expenditure includes
Rs. 3,000, being cost of permanent glow sign board affixed outside the office
premises.
ii. Commission accrued but not
received Rs. 4,500 is not credited to P & L Account.
iii. Mr. X pays premium of Rs. 6,000
on his own life.
iv. General expenses include:
a) Rs. 500 spent for arranging a
party for Mr. X’s son who arrives from Canada.
b) Rs. 1,000 for contribution to a
political party.
v. Loan availed from Mrs. X was for
payment of arrear tax.
A Mr. X (aged 59 years) furnishes the
above Profit and Loss account for the year ended 31st March, 2015.
Compute the Gross Total Income of Mr.
X under respective heads, his Net Taxable Income and Tax liability in the
assessment year 2015-16.
Answer. Computation of Gross Total
Income of Mr. X under respective heads, his Net Taxable Income and Tax liability in the assessment
year 2015-16:
Spring-2016
Get solved
assignments at nominal price of Rs.125 each.
Mail us at: subjects4u@gmail.com or contact at
09882243490
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